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An overview of third party risk management frameworks

Andrew Robinson Jan 07, 2023

What is a third party risk management framework?

A third party risk management framework is a set of policies, procedures, and tools that an organization uses to identify, assess, and manage the risks associated with its relationships with third parties. 

The purpose of a third party risk management framework is to help an organization ensure that it is working with trusted partners who are capable of meeting the organization's needs and complying with its policies and standards.

Why are third party risk management frameworks important?

Third party risk management (TPRM) frameworks are important because they help organizations identify, assess, and manage the risks associated with their relationships with third parties. These risks may include financial, reputational, legal, and regulatory risks, as well as risks to the confidentiality, integrity, and availability of the organization's data and systems.

By implementing a TPRM framework, organizations can ensure that they are working with trusted partners who are capable of meeting the organization's needs and complying with its policies and standards. This can help organizations avoid costly disruptions and potential damage to their reputation, and protect the organization's interests and assets.

In addition, TPRM frameworks can help organizations comply with relevant laws, regulations, and industry standards. Many industries have specific requirements for managing third party risks, and organizations that fail to adequately assess and manage these risks may face regulatory penalties or other consequences.

What are the key considerations while choosing a TPRM framework?

There are several key considerations that organizations should keep in mind when choosing a third-party risk management (TPRM) framework:

  1. Alignment with business objectives: The TPRM framework should support the organization's overall business objectives and help the organization achieve its goals.
  2. Scalability: The TPRM framework should be able to accommodate the organization's current and future needs, including any changes in the number or complexity of third parties that the organization works with.
  3. Integration with existing processes: The TPRM framework should be able to integrate with the organization's existing processes and systems, rather than requiring significant changes or additional resources to implement.
  4. Ease of use: The TPRM framework should be easy to use and understand so that it can be effectively implemented and maintained by the organization.
  5. Customizability: The TPRM framework should be flexible and customizable so that it can be tailored to the organization's specific needs and requirements.
  6. Cost: The TPRM framework should be cost-effective, with a reasonable balance between the benefits it provides and the resources required to implement and maintain it.
  7. Support and maintenance: The TPRM framework should come with ongoing support and maintenance from the vendor or provider, to ensure that it stays up-to-date and effective.

By considering these factors, organizations can choose a TPRM framework that is well-suited to their needs and helps them effectively manage the risks associated with their relationships with third parties.

Some frameworks for TPRM 

Below are some of the frameworks used for third party risk management.  

NIST Risk Management Framework (RMF) 800-37

The National Institute of Standards and Technology (NIST) has developed a comprehensive risk management framework that allows organizations in all industries to effectively integrate third-party risk management with information security management.

This framework, known as NIST 800-37, provides a strong foundation for managing risk throughout an organization, including risks related to third and fourth parties. Section 2.8 of NIST RMF is particularly relevant for addressing supply chain risk. When considering onboarding new third-party vendors, NIST 800-37 can be a valuable resource for developing risk mitigation strategies.

NIST cybersecurity framework (NIST CSF)

The NIST Cybersecurity Framework (CSF) offers best practices that can be helpful when designing vendor questionnaires. The NIST CSF is a set of standards that provides a common reference model for discussing cybersecurity issues and is widely regarded as the gold standard for building a cybersecurity program.

By basing your vendor risk questionnaire on controls found in the NIST CSF, you can accurately assess a potential vendor's cyber risk profile as part of the assessment process. This can be especially useful for organizations that have significant data privacy or regulatory compliance concerns.

ISO 27001, 27002 and 27018

The ISO 27001, 27002, and 27018 standards establish guidelines for creating, implementing, maintaining, and continually improving an information security management system. While these standards cover a wide range of topics beyond third party risk, they do include a significant section on managing supplier risk as part of a broader information security program.

When designing your third-party risk management (TPRM) program, it is worth considering not only the ISO provisions related to third-party risk but also the broader information security controls that could be applied to your vendor risk assessment process. These controls can help ensure that your TPRM program is comprehensive and effective in managing the risks associated with your relationships with third parties.

ISO 27036

ISO 27036 is a standard for information security for cloud services. It provides guidance on how organizations can secure their information when using cloud services.

The standard is relevant for organizations of all sizes, including small and medium-sized enterprises, and can be applied to various types of cloud services, such as infrastructure as a service (IaaS), platform as a service (PaaS), and software as a service (SaaS). It is intended to be used in conjunction with other information security standards, such as ISO 27001, which provides a framework for information security management.

Final thoughts

Implementing a third party risk management framework can help an organization reduce the risks associated with its relationships with third parties and ensure that it is working with partners who are trustworthy and reliable. It is an important part of an organization's overall risk management strategy and helps to protect the organization's interests and assets.

To make the management of third-party relationships more efficient, organizations adopt intelligent tools that use existing cyber security risk data to streamline their third party risk management processes. The 6clicks platform assists in identifying and prioritizing third-party cyber risks.

With automated assessments, in-built resources for implementing frameworks, and easy monitoring, it is easy to secure your organization against third party risks. To know more, see our solution page - Vendor Risk Management.

For more information on how 6clicks uses automation and AI to build a risk and compliance platform that is trusted by SMBs, MSPs, advisors, and large enterprises, book a demo with us and get started with 6clicks.

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